Frank Cain
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Bank “Bogeymen” and Other Outdated Myths | Canadian Insurance

Bank “Bogeymen” and Other Outdated Myths

Letter to the Editor

I do not believe the issue was ever about “bogeymen,” whether banks are opening a new field of selling insurance or whether brokers have let their guard down.

I do believe the issue is about whether agents of a bank’s insurance arm should be licensed under RIBO and subject to its rules and regulations for the benefit and protection of the insurance-buying public.

In fact, the authority to sell insurance that is given these agents is under the regulation of FSCO and therein lies the rub.

For example, under RIBO rules, brokers are forbidden to entice a potential client by dangling the proverbial carrot on a stick. But a bank can automatically and by inference entice a customer by dangling their insurance arm on the end of their stick. An example: “Mary, we got a terrific rate on our mortgage. Who’s to say how long that will last if we don’t take their insurance?”

Is this enticement? A most emphatic Yes! Are banks bogeymen? No. But rather, very shrewd businessmen assisted by a government(s) whose forays into the insurance business know no ends–to wit, OSFI, ICA, Superintendent of Insurance, Ontario, and CCIR.

Respectfully submitted,

Frank Cain, Michael Palermo & Associates,

© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the February 2010 edition of Canadian Insurance magazine.